Del Mar Highlands Town Center rejects Kilroy offer

Kilroy Realty recently made a proposal to One Paseo’s potential future neighbor across the street, Del Mar Highlands Town Center. Kilroy offered to build the Highlands a $5 million parking garage to alleviate that center’s parking issues in exchange for the Highlands giving up its 150,000 square feet of entitlements (entitlements mandate the permitted building types that may be constructed on a property). Del Mar Highlands’ owner Donahue Schriber has rejected the offer.

Bob Little, Kilroy Realty vice president of development, said he is disappointed that Donahue Schriber turned down Kilroy’s offer.

“We proposed building a parking structure on their site to make a significant improvement to their parking situation which everyone in the community talks about constantly as a problem,” Little said, saying Kilroy would get nothing out of the garage except provide a “huge community benefit” by improving the Highlands’ parking situation. Little added that as the Highlands is entitled to build an additional 150,000 square feet on its property, that additional square footage will bring more cars, more daily trips. So by retiring that entitlement, it would save Carmel Vally from having even more cars on its roads.

“It’s too bad they declined without consideration for the community’s needs,” Little said.

Elizabeth Schreiber, vice president and general manager of Del Mar Highlands Town Center, said she is disappointed that Kilroy is attempting to shift focus from its own problems onto Del Mar Highlands.

“Donahue Schriber is disappointed that Kilroy continues to employ tactics seeking to deflect their impacts onto others, rather than scaling back their project as per the community’s request and offering real solutions to the concerns of Carmel Valley residents and businesses,” Schreiber said.

Little said the parking garage proposal was made as a result of a Carmel Valley Community Planning Board suggestion that the two property owners speak to each other about how to deal with the future retail entitlement at the Highlands.

On March 13, John Kilroy sent a letter to Patrick Donahue, the chairman and chief executive officer for Donahue Schriber, making the initial offer.

Kilroy stated that the Highlands’ increase in square footage has “created a parking deficiency that cannot be solved in its current configuration and is a significant concern to both your customers and tenants.”

Kilroy proposed increasing the existing parking supply by 330 cars with a Kilroy-funded, two-level parking garage at the back of the Highlands Center.

Donahue responded to Kilroy’s letter on March 21, “respectfully declining.”

“We are exploring plans to build out much of our remaining entitlement, which would likely include the construction of our own parking garage if and when we were to proceed,” Donahue wrote.

He said the Highlands’ recent remodel increased the parking at the center by nearly 200 stalls and they continue to study ways to improve and enhance the experience for Highlands’ customers.

“Frankly, we don’t think the parking at Del Mar Highlands has anything to do with your One Paseo project,” Donahue wrote, noting that they have met with Kilroy on a number of occasions to express their concerns about the project’s density and traffic issues. “You building a garage on our property at the cost of us retiring our entitlement does nothing to alleviate those concerns. Moreover, your project is opposed by thousands of Carmel Valley residents and we suggest you should be working with them to address and alleviate their concerns vs. worrying about our parking.”

Little said the Highlands’ letter was an announcement of Del Mar Highlands’ intent to increase its center by 50 percent, 150,000 square feet, without any traffic improvements.

“Obviously they want to continue their retail dominance of the community without speaking to anything that might be a big community benefit,” Little said. “This was not a small offer, this was a significant offer from our CEO to them and it was flat-out declined.”

Schreiber said that it is untrue that the letter was an announcement of the center expansion. She said their additional entitlements were approved more than 20 years ago and they will move forward with the plans at the appropriate time.

“The letter to Kilroy Realty was not an announcement regarding the start of construction to complete the build out of our shopping center,” said Schreiber. “Additionally, to clarify the misleading statements made by Kilroy Realty, traffic improvements associated with the build out of the Del Mar Highlands Town Center have already been made.”

Little said the rejection indicates Donahue Schriber’s intent to maintain “self-serving retail control of Carmel Valley” and that he doesn’t know anyone who wants that center to take advantage of its remaining entitlements to expand and “exacerbate” its existing parking problem.

“Donahue Schriber welcomes other retailers to Carmel Valley as long as the projects proposed don’t destroy the character or nature of the community as One Paseo would,” Schreiber said in response. “As currently proposed, One Paseo is three times what is allowed under current planning and entitlements for that land.”